When the market conditions of a company change, but a business doesn’t adapt to that change, it almost always dies. Adapting to changing industry conditions is one of the central jobs of firm management. If the leaders of business do not bring about the needed change, who else would? But the question is how easy is it to change.
Can A Business Adapt To a Changing Environment?
I explore this question in this podcast episode and search for answers in the management science literature. Since adapting to a changing world is such a critical issue for every business leader, there is an extensive literature on adaptation. Scholars in economics, sociology, organizational theory and many other fields and subfields have explored this questions.
Two Major Change Theories
In the episode, I delve into two critical theories that deal with adapting to change. The first is the theory of population ecology of firms and the second is the theory of evolutionary economics. They provide different answers and substantial empirical research to back their claims.
Stories of Adaptation
I share many stories of firms that failed to adapt and thus died. The episode goes beyond individual companies to large groups of firms where not a single company survived when its environment changed. At the same time, I share stories of businesses that survived multiple changes in their environments.
The Art of Adaptation
Beyond exploring the literature and seeking clarity on this critical questions, I also share a solution to the existential challenge of adaptation. In my book, the dark side of innovation, I developed a meta strategy framework that can help firms anticipate changes and adapt to those changes.
The key takeaways from this episode are:
- Do businesses adapt to change or do they fail to adapt to change?
- Why do companies find it challenging to adapt to change?
- What do major theories in management research predict about adaptation?
- Stories of firms that adapted to change and those that failed to adapt.
- Some actionable steps you can take to ensure your business will adjust to a changing environment
- A framework that can help your firms to build an adaptation capability.
Hannan, M. T., & Freeman, J. (1977). The Population Ecology of Organizations, 82(5), 929–964. http://doi.org/10.2307/2777807
Hannan, M. T., & Freeman, J. (1984). Structural Inertia and Organizational Change. American Sociological Review, 49(2), 149–164. http://doi.org/10.2307/2095567
Karim, S., & Mitchell, W. (2000). Path-dependent and path-breaking change: reconfiguring business resources following acquisitions in the U.S. medical sector, 1978-1995, 21(10-11), 1061–1081.
Klepper, S. (2002). Firm survival and the evolution of oligopoly., 33(1), 37.
Mitchell, W., & Nagarajan, A. (1998). Evolutionary Diffusion: Internal and External Methods Used to Acquire Encompassing, Complementary, and Incremental Technological Changes in the Lithotripsy Industry, 19(11), 1063–1077. http://doi.org/10.2307/3094054
Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change, xi–437.
Singh, J. V., & Lumsden, C. J. (1990). Theory and Research in Organizational Ecology, 16, 161–195. http://doi.org/10.2307/2083267
How to Listen?
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